sebi:MO/82/IVD/01/2007
This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.
Facts / Headnote
Suspension of certificates of registration for a period of four months
Provisions invoked
- s. 19
Regulations
- Reg. 7
- Reg. 4
- Reg. 13(2)
- Reg. 13
- Reg. 5
- Reg. 4(b)
- Reg. 4(2)
Parties
- M/s. Pranav Securities Pvt. Ltd.
Holding
M/s. Pranav Securities Pvt. Ltd. violated Regulation 4(2)(a) & (b) of the FUTP Regulations, 2003 and Regulation 7 of the Broker Regulations by facilitating manipulation in the scrip of PTL, and its certificates of registration Nos. INB010714330 and INB230714330 were suspended for four months.
Full text
Page 2 of 20 period between October 3, 2000 and July 27, 2001. It was observed during investigation that PSL was one of the entities who had actively traded in the shares of PTL during the relevant period of time and contributed to the unusual spurt in the traded volumes of PTL, thereby facilitating manipulation in the scrip of PTL. At the time of investigation PTL was listed on BSE and Hyderabad Stock Exchange (HSE). 2.0 Appointment of the Enquiry Officer
Page 3 of 20 Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as FUTP Regulations). The Enquiry Officer also found that the said broker violated the provisions of Regulation 7 of the Broker Regulations, 1992. Having found the broker to have violated the above mentioned regulations, the Enquiry Officer in her report dated June 30, 2005 recommended a major penalty of suspension of the certificate of registration of the said broker for a period of four months.
Page 4 of 20 b. PSL was an institutional broking house for various Mutual Funds, Institutions, Foreign Brokers, FIIs etc. and these institutions requested PSL to show sizable lots to enable buying by them. In effect, all the purchases by PSL for their sister concerns were merely to achieve this objective. c. Most of the purchases were before the market collapse in February – March 2001. When the markets fell, the institutions lost interest in the scrip of PTL and hence PSL was not able to place the stock with the entities that had earlier evinced interest in PTL. d. PSL was stuck with huge quantities of shares of PTL with substantial value depletion i.e. from Rs.149/- to Rs.25/- from February 2001 onwards. e. PSL did not wait for the revival of the market and sold off its holdings at the prevailing market prices in July 2001 to the first available buyer, largely on the screen and in some cases, through negotiated deals. f. PTL being illiquid scrip, the volumes traded by PSL was quite significant. g. M/s C J Dalal was PSL’s neighbour with their office just two doors away from PSL’s office. As per the common market practice of giving and taking loans from fellow brokers on a short term basis with no interest, PSL had given a loan to C J Dalal on a short term basis without charging any interest. However, PSL was unaware that C J Dalal had picked up a stake in PTL, (through negotiated deals with PSL) which was less than 30% of the total purchases of PTL. h. Its clients; Shri Sami
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Source: SecMarx — sebi:MO/82/IVD/01/2007. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.